The resilience of the US economy in recent years was interpreted by many investors as a demonstration of US ‘exceptionalism’, Rabobank's FX analyst Jane Foley notes.

Greenback’s global lead remains intact for now

"The surge in US recession fears that followed Trump’s tariff announcements on April 2 sparked a rapid exit from ‘exceptionalism’ trades, which overpowered the USD’s traditional safe-haven attraction. While other currencies are set to continue chipping away at the USD’s dominance as the global reserve currency, the greenback is set to maintain a clear lead for many years to come." 

"In line with this, we expect that the USD’s safe haven character can be restored in the months ahead.  The exact timing will likely depend on whether US recession risks increase or disperse, since this will guide net flows in and out of USD assets. On the back of the weakened outlook for the US economy we maintain 12-month forecasts of EUR/USD1.15 and USD/JPY140.00."